The Deloitte in Scotland blog will offer reflection and comment on the latest industry news from north of the border, focusing on the issues affecting businesses in Scotland and providing advice, insight and expertise on the topics your business or organisation.
Poor mental health does not discriminate; it is blind to gender, ethnicity, seniority and age. Although not always visible, it directly affects one in four people in the UK, and it is likely that everyone will know someone who is struggling with mental ill health.
Our ‘This is me’ campaign features some of our own people at Deloitte who wanted to talk about their own experiences of mental health and their stories of recovery. A Netball champion, a world traveller, a father, a successful manager. Everyone has a story, and sometimes mental illness is part of that. But it’s never the whole story.
Watch their stories - from the moment they realised they needed help, to feeling confident about coming back to work. You can learn about how they manage their conditions day by day, by talking about it with colleagues and making time for the things that matter – from playing the violin to netball with friends and crochet.
I am a Deloitte audit partner and also a Mental Health Champion. The Champion role is a very important role to me and it has two main components. Firstly, Champions are responsible for raising awareness, speaking to teams and communicating the various support networks in place. We tell our stories and encourage others to as well. Secondly, we are an independent sympathetic ear for people with concerns about themselves or a colleague. We can also talk about accessing more formal support structures such as one to one counselling which can be accessed quickly and confidentially through our Employee Assistance Programme.
Mental Health Champions do not solve people’s difficulties, but we can be a really helpful first step towards support and recovery.
Ask “Are you okay?”
Do you know someone who hasn’t been their usual self? Do they seem down, a little agitated or emotional? Maybe you can't put your finger on it, but you sense something’s wrong? Don't ignore it, trust your instincts and ask if they're okay. By reaching out and starting a conversation you could help someone get the support they need.
Colin is an audit and assurance partner based in our Glasgow office, working with a broad range of listed and private companies. Colin has been one of Deloitte’s network of Mental Health Champions for the last three years; the Mental Health Champions are available for anyone to talk to and offer confidential advice and support. They are trained to be able to support and signpost, and understand the importance of good mental health. Many of them have had some form of personal experience with mental illness and are able to relate to those who approach them.
What happens when you put Fintechs from Scotland, Hong Kong and Singapore together? A lot of great chats and collaboration opportunities!
UK Fintech Week saw Fintechs from around the world visit the UK, named by City AM as the World’s top Fintech hub (2019). To mark this, Deloitte, FinTech Scotland and Scottish Development International hosted a meet-up for the Scottish Fintech eco-system and visiting start-ups from Hong Kong and Singapore. The event brought together the visiting firms and the Scottish Fintech community at our Edinburgh Office on 2nd May, allowing attendees the opportunity to get an insight into two of the world's leading Fintech ecosystems and join the discussion about increasing collaboration.
As part of UK Fintech Week, seven Fintechs from Hong Kong and Singapore interested in the UK/European market travelled to the UK supported by the Department of International Trade (DIT). DIT worked closely with Scottish Development International (SDI) to host delegates in Edinburgh to learn about the growing community and meet key stakeholders.
The purpose of the event was to provide an opportunity to connect with Scotland’s vibrant ecosystem and allow Scottish companies the opportunity to learn about the growth of Fintech in AsiaPac. Kent Mackenzie, Global Head of Fintech & RegTech Advisory Partner at Deloitte shared insights on the growth of global Fintech ecosystems offering examples of recent work, followed by an informative panel discussion, focused on Hong Kong and Singapore with Bettina Wong (Hong Kong Science and Technology Park), Charles Lam (Hong Kong Cyberport) and Avere Hill (Cynopsis). Questions covered access to finance and talent as well as the regulatory similarities and differences with the UK.
Finally, each of the visiting delegates were invited to share what their business does with the audience, which led into a very productive networking session after.
Andrew is a senior consultant within Deloitte’s Risk Analytics team in Scotland within the Risk Advisory practice. He has delivered a wide range of projects relating to the development and promotion of Scotland’s financial services sector. Through these projects he has developed an extensive knowledge of the Fintech sector and has built a network of key relationships in the ecosystem across Scotland and globally.
The Fraser of Allander Institute’s latest Economic Commentary, which is supported by Deloitte, highlights that Scotland’s economy continues to demonstrate some resilience most notably through near all-time high levels of employment, currently at 75.6%, and continuing steady, if low, growth – Scotland’s economy grew by 1.4% in 2018.
While these positive indicators are welcome, Scotland continues to be challenged, like much of the rest of the UK, by fragile levels of productivity growth with the consequent impact on real earnings growth. This quarter’s Commentary points to productivity in Scotland having barely moved since 2010. In addition, despite the record levels of employment, it also highlights that in-work poverty is on the rise with over 50% of those in poverty now living in a household where there is at least one working adult.
Further, the sluggish levels of productivity and earnings growth mean devolved tax revenues are forecast to grow more slowly, with a subsequent impact on Scottish Government budgets.
While most understand that improving productivity must be a priority in order to increase real earnings and raise living standards, as the Fraser of Allander points out, in these uncertain times it is proving difficult for policy makers to make room for the discussions and actions which can address the longer-term structural opportunities and challenges facing Scotland.
Similarly, while a cautious approach is understandable as businesses try to adapt to working within an environment where uncertainty is the new normal, without a bolder, more collegiate approach there is a risk that Scotland’s economic growth remains lacklustre.
Increased investment from businesses should help to improve productivity. However, the latest Commentary finds that business investment has now fallen in the UK for four consecutive quarters. This echoes the findings from Deloitte’s latest CFO survey which shows that businesses are continuing to build their cash balances and delay investment, with concerns about the long-term impact of Brexit reaching an all-time high.
However, it’s vital that businesses continue to consider the wide range of outcomes possible. A more ambitious and medium-term outlook through innovation, collaboration and investment in talent should help to create a more robust business climate that can help deal with the future economic and fiscal challenges.
There is a pressing need to encourage investment and to improve productivity. There is no doubt this is a significant challenge. However, with the economic strengths we have, a determination to capitalise on the opportunities that will arise while supporting people to enhance their skills, encouraging innovative thinking and improving collaboration in key sectors, we should be confident we can rise to the challenge.
Deloitte is proud to support the Fraser of Allander Institute’s Economic Commentary. Find out more here.
John oversees Deloitte’s tax practice in Scotland and is also the senior partner for the Edinburgh office. He is a corporate tax specialist and uses his substantial experience to advise a range of listed and privately owned companies on their most complex transactions.
24 April is EA (Executive Assistant) Day - designed to recognise and show appreciation for the support and commitment our EA's provide throughout the year. It's fair to say Deloitte would not function without the extensive support our EA's provide to our partners, directors and their teams, overall making a positive impact for the firm.
To celebrate the unsung heroes of Deloitte, an EA of the Year awards dinner was held in London on 17 October. After over 150 fantastic nominations and a difficult judging process, the final 18 EAs were shortlisted. We interviewed winner of the 'Up and Coming EA Award' Rhian Rankin, based in our Edinburgh office. Rhian has been at Deloitte a number of years before transferring into her current EA role. Aside from being as EA, Rhian is responsible for several roles within the office as well as client events. Colleagues say Rhian is committed, diligent, personable and articulate.
A bit about your role
I have a dual role working in Workplace Services dealing with the office and supporting a Director in my EA role. I have also covered working for a partner and his team during maternity breaks which I have very much enjoyed.
The roles compliment one another and gives you an great understanding from an office and EA perspective. For instance, I can relate to EA's and assist them with organising lunches/ dinners and events they have in the office as I work closely with our Front of House and Marketing teams. I also have two sets of networks which tie in together so it means I know lots of people within Deloitte.
I work closely with the Director in setting up all his client meetings and have total control of his diary. The clients regularly ask if they can use our meeting rooms so the two roles come together nicely. Also assist in setting up Transition Labs for clients and organising stakeholder calls which can be challenging.
How did you end up becoming an EA?
I have a good relationship with the Edinburgh partners and one of their EA's was going off on maternity leave so asked if I would be interested in covering. I jumped at the chance as this would give me another set of skills. I looked after the partner and his large team which involved looking after a large client over from the US for 3 days. I arranged everything from breakfast, external venue for dinner, and finding the perfect Scottish gift.
What do you think makes a good EA?
Super organised, have good communication skills, great networks and go with the flow as you don’t know what is going to come along. You can come in and have your day planned and suddenly it’s all change which happens regularly so you have to be adaptable.
How are you going to mark EA day?
Our partner-in-charge and one of our tax partners have invited the EA's for lunch so we are looking forward to that.
We hope you take this opportunity to celebrate this special day with the EAs you work with!
Last month, Deloitte was named winners in the Best Large Private Sector Employer (250+ employees) at the Scottish Top Employers for Working Families Awards run by Family Friendly Working Scotland.Family Friendly Working Scotland create and support working change in Scotland that builds economic success and improves the lives of families. The awards are unique in their focus on highlighting employers who have created genuinely family-friendly working and business cultures.
I am delighted that we received this recognition as every day at Deloitte my colleagues and I challenge ourselves to do the right thing, and that is as equally important when it comes to how we engage with everyone in our business, as it is to how we engage with our clients. Winning this award reflects the work done by people at every level of our firm to make our working culture one that helps everyone get a balance between work and home life that is right for them.
Our family-friendly working culture, recognised by judges at last month’s ceremony, includes a wide-range of formal and informal support which is available to every Deloitte employee in Scotland. This support includes a Working Parents Transition Programme, offering pre-parental leave coaching sessions, five monthly coaching sessions on the return to work, access to one-to-one external advice on child raising issues and emergency backup care, funded by Deloitte, up to ten times a year. We also have an industry-leading Return to Work programme supporting people who have been out of the workforce for an extended period as they return to a professional career and a Time Out initiative allowing employees to take up to four additional unpaid weeks of leave.
Research shows flexible working makes good business sense and it is certainly already helping to ensure that we keep talented people. We have increased our retention rate among mothers. 92% of women and 95% who have taken part in our Working Parents Transition Programme stay with us. Attrition rates for female colleagues at manager level and above have decreased to below the firm-wide average, while our Return to Work Programme has to-date enabled 37 women to re-enter the workplace.
It is imperative that employees can balance their home commitments while progressing their careers and we will continue to work to make sure our working culture is one of the most family-friendly in Scotland.
Deloitte is an accredited Living Wage Employer, a signatory to the Scottish Government’s Business Pledge and supports the Scottish Government’s ‘Fair Work Convention’, which places opportunity, fulfilment, respect, security and employees having an effective voice, at the heart of good modern work practice.
Steve's experience over the past 24 years has always been with retail financial services clients, especially retail banks and building societies. Steve is the Practice Senior Partner for Scotland and Northern Ireland, and he leads the Deloitte Financial Services Practice outside London.
Previously Steve worked on secondment for the EBRD in Eastern Europe, and spent 6 years in South Africa where he worked with local financial institutions. He is also closely involved with the firm’s thought leadership in relation to corporate governance and risk management, and was a member of the PRA Building Society Expert Group.
The changing international tax landscape, driven by the OECD’s Base Erosion and Profit Shifting (“BEPS”) process and its implementation, has increased compliance requirements and led many multinational groups to consider whether their transfer pricing policies are fit for purpose.
For groups in the oil and gas service sector, complying with increased regulation and managing transfer pricing risk has come as a challenge, particularly in the context of reduced headcount and cost pressures facing many groups. The evolving international landscape does, however, mean greater attention to transfer pricing will be required going forward.
Tax authority activity
Increased information sharing between tax authorities, as well as the introduction of country by country reporting for larger groups, is leading to greater level of tax authority scrutiny and challenge to transfer pricing arrangements.
The Deloitte 2018 BEPS Global Survey provides evidence of this. 447 respondents from multinational groups responded on various questions to gather views on developments in their organisation given the changing tax landscape. 86% of UK respondents to the BEPS global survey ‘agreed’ or ‘strongly agreed’ that tax authorities “will increase tax audit assessments globally as a result of the current BEPS debate”1. Further, statistics released by HMRC showed that UK transfer pricing challenges secured additional tax yield of over £1.6 billion in 2017/2018, over three times as much as the equivalent yield in 2012/20132.
With some traditional oil producing countries being particularly aggressive in challenging transfer pricing, the need for groups in the sector to give thought to their transfer pricing policies and documentation procedures is even more important. It is worth noting cash tax exposure is not the only significant risk arising from a transfer pricing challenge; often enquiries take a significant amount of management time and resource to address, which could be focused on other areas of the business. HMRC statistics show that the average age of settled UK transfer pricing enquiries in the 12 months to 31 March 2018 was 24.7 months. This increased to 30.4 months for open enquiries.
Having well designed transfer pricing policies compliant with OECD principles, with properly considered implementation and clear and consistent documentation, will be important to mitigate the risk of a successful challenge by tax authorities, and the time spent by management in reaching resolution.
Time to revisit
As market optimism picks up in line with recent oil price rises, revisiting transfer pricing policies and compliance procedures is a priority area for many multinational groups, particularly as they seek to take advantage of an upturn in international projects.
As well as being a tax related risk for many groups, it is worth remembering that a robust transfer pricing policy, aligned to economic substance and value drivers, will still be a contributing factor to a group’s management of ETR and cash tax profile. Given increased revenue activity and a need to manage tax strategy and compliance, now is an opportune time for groups to revisit their approach to transfer pricing.
As a cyclist, a Dad to a racing cyclist, a cycling coach and as someone who works across within sport both in my day to day role and outside through Scottish Cycling, I know what attributes are required to succeed. Cycling is about passion, commitment, leadership and teamwork. It is about having the confidence to take on challenges and knowing that you have a team to rely on while striving for the best.
Put it all together and it's easy to see why we are a proud backer of the Women’s Tour of Scotland. We are a nation that celebrates our diversity and equality so I am personally delighted that Scotland is hosting the inaugural Women's Tour of Scotland. There will be about 18-20 of the worlds’ leading elite teams taking part on 9 to 11 in August this year. Importantly this is the first time a Women’s race has been brought before a Men’s and the first time the prize money for an equivalent men’s race has been matched from day one.
With an ambition to make the Tour the most digitally connected race over the next five years and the world’s first climate positive sports event by 2020, this is an event we are delighted to support as it aligns with our values and commitment to making impact that matters:
DIVERSITY & INCLUSION
First time a Women's race has been brought before a Men's
First time Official Rights Holder has matched prize money equivalent to a Men's race from day one
Ambition to be the first climate positive event by 2020
HEALTH & FITNESS
Cycling promotes and reinforces a healthy lifestyle. Healthy bodies contribute to healthy minds
WORLD CLASS TALENT
Much like the teams that enter, Deloitte is a place where leaders thrive, talent aspires to achieve more than they imagine, and where we embrace the success of others
TECHNOLOGY CHANGES LIVES
We will change the face of this sport for riders, fans, and consumers through leveraging cutting edge technology
The firm's engagement goes beyond the fan and user experience and will join to help the team become more connected and operationally efficient. We think we can change the face of cycling through technology.
As part of the Tour’s legacy and development programme, alongside the professional race, each start and finish will feature family activation zones. This will be for fans, spectators, local residents, cycling clubs, visitors and families to get involved and be inspired to ride. Of course I also believe this race will inspire young girls to get involved in cycling. It is great to imagine future cycling stars coming up through the ranks as a result of seeing some of the top cyclists who will be racing through towns and cities across Scotland. The more we can inspire women and girls to get out and get active, the better for everyone.
Gareth has worked in digital and digital marketing leading client side teams for more than 15 years. He made the leap to agency side a little over a year ago, taking on the challenge of building and growing a Digital practice in Scotland for Deloitte. Having worked in all areas of digital, his role now sits somewhere in between Creative and Client Service, challenging our clients to think differently and be more focused on the “humans” whether they be their customers or employees.
Non exec Director Scottish Cycling | BIMA council member.
Mergers and acquisitions are engrained in the oil and gas industry’s DNA. But while traditionally such activity in the North East has focused on international expansion, often driven by customer demand, the oil price collapse has cultivated a much more dynamic mergers & acquisitions (M&A) environment.
Such dynamism is evidenced by the number of UK oil and gas service companies increasingly considering diversification strategies into new industry sectors such as industrial, power generation, renewables and even more broadly.
Diversifying into new industry sectors and markets can help organisations to insulate themselves against continued oil and gas cyclicality, by opening access to a new client base and potentially unlocking economies of scale.
A snapshot of activity over the past two years shows how the M&A landscape is changing and organisations are succeeding – EnerMech, Oceaneering and Wood plc to name but a few.
These organisations, and others like them, have developed diversification strategies in terms of the services they provide and the markets they are competing in. Either through strategic acquisitions or organic growth – or often both - it’s possible for companies to extend their capabilities and broaden the sectors they serve, whereby ensuring their revenues are less reliant on the oil and gas sector.
While the potential benefits of diversification seem relatively straightforward, delivering this strategy and executing transactions in an entirely different market can be anything but. Understanding the different business models and contracting practices applied is critical to assessing whether a business is well placed to venture into a new market.
Diversification involves careful consultation and assessment that should ideally be based upon key factors, including: potential industry growth; understanding of commercial/contractual risks; ability to cross- sell services; and opportunity to leverage extended geographical footprint.
Proving expertise in a new sector can also be challenging which is why M&A can offer an attractive route to market.
Careful integration planning is key to successful diversification as well as significant investment of time and energy. To unlock the full value from an acquisition, it is essential to establish the right team that can design the operating model with full access to information from both companies.
These deals typically create value from overhead cost reductions and the benefits that come from bringing together complementary portfolios. It provides more resources, better skills and talent base while reducing commercial risks, building on contacts and giving the all-important competitive edge. For larger organisations, it also allows for more specialisation, which drives functional excellence.
Scotland’s oil and gas industry is renowned for its know-how, technology and innovation. Such assets have considerable potential in helping to solve the challenges of a range of other industries, particularly those emerging sectors where processes are still being optimised and supply chains are not yet well established.
As the energy transition evolves, so too does the opportunity for services companies to expand into the broader industrials sector and service the power generation and distribution market.
Shaun has led the transaction services team in Deloitte’s Aberdeen office since setting it up in 2009. He became a partner in 2018 and specialises in advising clients in the UK’s oil and gas industry including the upstream, midstream and oilfield services sectors.
Scotland’s economy lags similar sized advanced economies in most measures, including that of productivity. Closing this so-called productivity gap – for Scotland and for the UK as a whole - is an economic prize that is well worth pursuing, since productivity is the single most important factor in determining the wealth of a nation.
Indeed evidence shows that the more productive an economy, the higher the per-capita income and the healthier the nation. Increasing productivity for an advanced economy is considered to be the most sustainable way of improving living standards over time.
Productivity encompasses all parts of the policy sphere. Clearly, the economic levers that are available to a government are critical tools in improving productivity, but so are policies on education, welfare, health etc. Thus, the devolved settlement in Scotland affords the Scottish Government many of the policy levers that will have an impact on productivity.
The picture, however, is made more complicated by the fact that policy choices that affect productivity can also have negative impacts on other aspects of the nation’s economy. For example, productivity can be increased through greater investment by businesses in physical capital, but this can have a negative effect on employment levels. Indeed, of the countries ranked higher than Scotland in productivity tables, only a handful have lower unemployment rates.
Scotland is ranked in the third quartile of OECD countries but the Scottish Government has a target of the top quartile. The challenge is to improve our productivity while mitigating against risks such as greater levels of unemployment. It is clear, therefore, that policy choices open to the Scottish Government need to be well designed.
The Scottish Policy Foundation has developed a macro-economic model of the Scottish economy in conjunction with the Fraser of Allander Institute at the University of Strathclyde. The model shows what the likely impact will be on Scotland’s economy if a series of changes is effected. Bold, innovative and well thought-out policy prescriptions are needed to tackle Scotland’s productivity challenge, and the Scottish Policy Foundation is working with think tanks and other organisations in Scotland to enable them to test out their policy ideas using our macro-economic model.
You can find out more about the work of the Scottish Policy Foundation here, and its people here.
Alison Moore has been Director of the Scottish Policy Foundation since June 2017. The Scottish Policy Foundation is Scotland’s grant-giving foundation for public policy research. The Foundation aims to foster high quality public debate by supporting the work of think tanks from across the political spectrum in order to promote honest, insightful and objective policy research.
Following a recent visit to our Edinburgh office, we're delighted that Kate Forbes MSP, Scotland's Digital Economy Minister has provided a guest blog providing her perspectives on how digital can help unlock productivity.
Productivity is vital for a nation’s long-term, sustainable growth and is underpinned by a skilled and diverse workforce. I believe that digital is an area that can help unlock workplace productivity and there is undoubtedly a role for government in doing as much as we can to support this.
The Scottish Government’s Digital Strategy sets out our vision for Scotland as a vibrant, inclusive and outwards looking digital nation. It makes it clear that we will put digital at the heart of everything we do in a bid to deliver inclusive economic growth, reform our public services and prepare our children for the workplace of the future.
We also see ourselves as part of an ecosystem of digital organisations that share ideas, talent and technologies to drive the nation’s digital economy. By supporting the development of formal clusters in data-driven innovation, FinTech, cyber security and others, we are enabling industry, government and academia to collaborate effectively, encouraging innovation and ultimately boosting productivity.
The global success of companies like Skyscanner and Rock Star North highlight that Scotland has got the conditions for tech enterprises to grow, scale-up and succeed on the world stage. We will continue to invest in our infrastructure to support this economic growth.
We will continue to invest in our people too. Productivity is ultimately about people after all so we want to ensure that our future workforce has the necessary skills to embrace all the digital opportunities of 2019 and beyond.
Of course, beyond government, we want those opportunities to be widely available to people across the country. That is why we recently announced a new £1 million Digital Start Fund to support people on lower incomes to access the skills required for a career in the digital industries. I look forward to developing this fund, alongside others, to do everything we can to be a successful digital government with a successful digital economy in a constantly changing digital world.
Kate was appointed Minister for Public Finance and Digital Economy in June 2018. Kate’s responsibilities in this role include supporting the Cabinet Secretary for Finance, Economy & Fair Work. Kate is originally from Dingwall and was elected as MSP for Skye, Lochaber and Badenoch in 2016. Prior to becoming an MSP Kate was an accountant in the banking industry.